John Muir CEO discusses proposed regional health care network

UCSF Medical Center and John Muir Health have signed a letter of intent to create a Bay Area health care network intended to provide patients with high quality care and an exceptional experience at an affordable price. A final agreement is expected by the end of 2014.

Under the proposed agreement both UCSG and John Muir would remain independent, but a new company would be created that is equally owned and operated by both organizations. The new company would serve as a funding vehicle for future joint initiatives and a shared services organization to support programs and initiatives focused on better health care, at lower costs, for Bay Area patients.

cal knight john muir health community benefitThe first of these joint initiatives is investment in a collaborative effort with other health care providers to form a regional health care network, or “accountable care organization” (ACO). Establishing a Bay Area-wide ACO will provide patients from throughout the Bay Area and Northern California with a competitively priced option to access, close to where they live or work, many of the Bay’s Area’s most trusted and respected hospitals, health systems and physician organizations.

Last Week, Cal Knight, the President and CEO of John Muir Health, released a memo further that discusses potential positive impacts such a partnership can help create:

Memorandum

Date: July 29, 2014

To: All John Muir Health Physicians, Staff and Volunteers

From: Cal Knight, President and CEO

Subject: New Proposed Affiliation with UCSF

I have good news to share that will ensure that John Muir Health continues to be an independent, community-based and locally governed health system, while also giving more patients access to the outstanding care and service delivered by all of you.

Our proposed affiliation with UCSF Medical Center (UCSF) and collaboration to create a regional health care delivery network, which you can read about in more detail below, is consistent with John Muir Health’s internal and external strategic priorities. For example, opening the new Outpatient Center at 1450 Treat and the planned opening of an Outpatient Center in Pleasanton meet our strategic priority to grow and strengthen our local delivery system. The installation of Epic allows us to enhance care coordination and the patient experience, two other strategic priorities. In this case, the agreement we are working on with UCSF would allow us to grow our delivery system beyond Contra Costa County and attract more patients, which is part of our strategic priority to develop regional affiliations and payer strategies.

We are following a clear path that includes these and other strategic priorities established by our Board of Directors and a vision for the future, which we call Vision 2022. These annual and long-term goals guide our decisions by detailing the type of care we want to deliver, your role in delivering that care and how we will serve the community now and in the years to come. Our affiliation with UCSF plays an important role in helping us achieve that vision.

Creating a New Company: John Muir Health and UCSF have signed a Letter of Intent (LOI) to invest in a new company, owned and governed 50% by John Muir Health and 50% by UCSF, to develop, along with others, a regional health care network or “accountable care organization” ( Bay Area ACO). The goal of the affiliation and the Bay Area ACO is to grow our delivery system beyond Contra Costa County and attract more patients. We anticipate signing final agreements by the end of 2014.

Impact on JMH, Physicians, Staff and Volunteers: You may have questions about what this proposed affiliation means for you and the health system. I want to be clear that our proposed affiliation with UCSF is not a sale, merger or acquisition. It is about growth and securing our future. Our collaboration will enable us to provide high-quality, cost-effective care to an even greater patient base. There are no changes for our existing patients as they can continue to access John Muir Health for their care just as they do today.

To our physicians, the goal of the affiliation is not to bring UCSF specialists to our community. Indeed, doing so would duplicate many specialties and services that John Muir Health already provides. Rather, John Muir Health services will continue to be provided by our local network of community physicians, and local physicians will be free to refer to specialists as they do today no matter their affiliation. John Muir Health will also continue to invest in our physicians, employees, services and technology outside of the proposed affiliation with UCSF.

To our employees and volunteers, the proposed affiliation does not change the work you are doing today. In fact, we believe it will create new opportunities for employees who may wish to pursue positions in the newly created company or the Bay Area ACO.

Affiliations we pursue often also lead to questions about investing in our future, while we are working so hard to become more efficient and more affordable. Our proposed affiliation with UCSF complements those efforts very well. The additional scale of our operations through the new company and Bay Area ACO will allow us to spread our cost base over a larger area making us more efficient.

Affiliation Analysis and Process: The decision to pursue an affiliation with UCSF was made after careful consideration. It was approved by our Board of Directors, which includes community members and physicians, after a rigorous evaluation process. For the last several months, we examined a number of affiliation options, including no affiliation at all. We looked at various potential partners that would allow us to grow our footprint beyond Contra Costa County without compromising our mission, vision and independence. This is the same strategy we have used in successful affiliations with Tenet/San Ramon Regional Medical Center and Stanford Children’s Health/Lucile Packard Children’s Hospital (LPCH). Our proposed affiliation with UCSF strengthens John Muir Health’s ability to remain independent, work with local physicians and staff to build our programs and services, and invest in our community so patients can continue to access John Muir Health for generations to come. We are making proactive decisions from a position of strength to ensure our future rather than being forced to do so out of necessity.

Bay Area-wide ACO: Establishing a Bay Area-wide ACO, one of the key aspects of the proposed affiliation, will provide patients throughout the Bay Area and Northern California with a competitively priced option to access, close to where they live or work, many of the Bay’s Area’s most trusted and respected hospitals, health systems and physician organizations, including John Muir Health, the John Muir Physician Network, John Muir Medical Group and Muir Medical Group, IPA. An ACO is a critical vehicle in the new health care environment to lower health care costs and improve quality for patients and employers. ACOs are designed to provide the right care at the right time and in the most appropriate setting, whether that is the primary care physician’s office, an outpatient center or a hospital, and savings achieved as part of an ACO can be passed along to consumers in the form of lower health care benefit premiums. This is the right model for our patients and John Muir Health.

Both John Muir Health and UCSF have experience in successful ACOs that have demonstrated lower health care costs and improved health care quality. Employers and other health care purchasers are increasingly demanding access to a regional network, like the one we are looking to develop, that provides measurable clinical quality, excellent service and a reasonable cost to them. Today, John Muir Health’s footprint is not broad enough to deliver such a network, and we are too small to have a direct influence on the price offered to buyers of health care. Development of the Bay Area ACO provides the necessary size and scale to offer a competitive price for the high-quality care, experience and services we provide, which allows us to better compete with Kaiser and Sutter.

Building on Our Strengths: UCSF shares our excitement about this proposed affiliation and sees us as a great strategic partner. They have high regard and great respect, as I do, for the care you provide.

The high level of care provided by both organizations is evident in the recent U.S. News and World Report rankings, which placed UCSF Medical Center, John Muir Medical Center, Walnut Creek and John Muir Medical Center, Concord as the top three hospitals in the San Francisco Bay Area. In addition, the John Muir Physician Network recently received the highest possible “elite” ranking from the California Association of Physician Groups for the fourth straight year. We strongly believe our proposed affiliation will build on the strengths of both organizations, which will benefit more patients across the Bay Area and Northern California, in addition to the communities we serve today.

Impact on Existing Partnerships: Our long-term relationship with Stanford Children’s Health/LPCH, which has enabled us to offer the community an expanded range of children’s specialty services, has gone very well and will continue. This includes joint development of a new Pediatric Intensive Care Unit (PICU) at the Walnut Creek medical center that is expected to open in early 2015. The PICU will allow more children and their families to stay close to home for their care rather than having to travel to Oakland, San Francisco or Palo Alto. Our joint ventures with Tenet/San Ramon Regional Medical Center are also not impacted by our potential affiliation with UCSF. Tenet/San Ramon Regional Medical Center would join us as a partner in the Bay Area ACO. We see these partnerships along with our proposed affiliation with UCSF as important to our future growth.

Change is Necessary: I recognize that change has been a constant for us for the past few years as we navigate a very different health care environment than what we experienced five, 10 or 20 years ago. All of the decisions we are making are with the best interests of our patients, community, physicians, staff and volunteers in mind. While this can be difficult at times, John Muir Health must evolve without sacrificing our Culture of Excellence or what makes us a great place for patients to receive care.

More Information: It is difficult to convey all aspects of our proposed affiliation with UCSF in one communication so we have developed a site on the Intranet with more information, including a list of answers to questions you might have. In addition, we will be having open forums in the next week at several locations. Please plan to attend one close to you, if possible.

We will continue to update you on our proposed affiliation in the months ahead. Thank you for the great work that you do to serve our patients and the community. It is an honor to be a part of such a stellar organization.

SEE PRESS RELEASE

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